Good morning, and welcome to Emerson third quarter 2023 earnings conference call. All participants will be in listen-only mode. If you need assistance, please signal a conference passer by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. Now I'd like to turn the conference over to Colleen Mettler, Vice President, Investor Relations. Please go ahead. Good morning, thank you for joining us for Emerson's third quarter fiscal 2023 earnings conference call. Today, I am joined by President and Chief Executive Officer, Lal Karsanbhai, Chief Financial Officer, Mike Baughman, and Chief Operating Officer, Ram Krishnan. As always, I encourage everyone to follow along with the slide presentation, which is available on our website. Please join me on slide two. This presentation may include forward-looking statements which contain a degree of business risk and uncertainty. Please take time to read the safe harbor statement and note on non-GAAP measures. I will now pass the call over to Emerson President and CEO, Lal Karsanbhai, for his opening remarks. Thank you, Colleen. Good morning. This quarter's results are a testament to the tremendous people of Emerson. I am humbled by what you do every day. Thank you for the passion and energy and the effort you bring to our great company every single day. Two and a half years ago, when I became CEO, we expressed our vision for accelerated value creation, culture, portfolio, and execution. I am proud today, more than ever before, of the progress we have made. The Emerson Management System has empowered our leaders and opened the world of possibilities for our company in the field of innovation and commercial excellence, with a higher growth, more cohesive portfolio. Above all, the Emerson Management System is the tool that enables our team to continue to deliver differentiated financial results. The work never ends. I am proud of how far we have journeyed and the clear road ahead. Please turn to slide three. Q3 was an exceptional quarter. Our teams continue to perform well and deliver for our shareholders. We made tremendous progress on our strategic priorities, closing the climate tran- the Copeland transaction, launching new-to-the-world products, and winning several key projects in our organic growth platforms, energy transition, industrial software, and priority discrete and hybrid markets. We have once again increased our expectations for the year based on our continued operational execution. We now expect double-digit underlying sales growth, approximately 50% operating leverage, and over 20% adjusted EPS growth for 2023. Top quartile performance. As we look ahead, we are energized by our value creation opportunities. Emerson is and will continue to benefit from our significant exposure to secular growth trends like energy affordability and security, sustainability and decarbonization, digital transformation, and nearshoring. Over 30% of our sales are directly aligned to these trends, as we discussed at our investor conference in November. Our technology and solutions are highly differentiated in these spaces, positioning our business for growth. We are also innovating for these markets, helping customers solve their toughest challenges with disruptive technology and solutions. Our portfolio transformation is paying off as we have aligned our cohesive portfolio to these secular trends. Our favorable value drivers, combined with our Emerson Management System, provide the roadmap for future success at Emerson. Turning to slide four, this quarter exceeded expectations across the board. Underlying orders were up 3%, led by high single-digit process and hybrid demand growth. We continue to see secular trends driving the demand strength. As an example, LNG projects continue to move forward, and customers' energy, energy transition and sustainability budgets are growing, improving resilient, both for greenfield projects in hydrogen, clean fuels and renewables, and for brownfield decarbonization opportunities like emissions reductions and carbon capture. Renewables is a particular area of strength. We are winning based on our superior technology and breadth of capabilities, which we'll discuss shortly. Nearshoring is also driving incremental investments around the globe in areas like life sciences and metals and mining. It is still early stages of global stimulus, but programs like the U.S. IRA, CHIPS, and IIJA are driving additional conversations with our customers, which we expect to turn into funded projects down the road. Our strong performance in process and hybrid was partially offset by demand in discrete, which continues to slow. Orders were down in Q3 against tougher comparisons for this piece of the business. As we mentioned previously, Europe, especially Germany, continues to slow, and we have seen some softening in the U.S. and Asia. Looking at the overall business and given continued robust demand and strong underlying growth drivers, we still expect mid-single-digit full-year order growth. The continued demand and improving supply chain environment, which includes improved availability of electronic components, enabled 14% underlying sales growth in the quarter, above our expectations. The Americas and Europe were up 11% and 13%, respectively, while Asia, Middle East, and Africa were up 20%. Strong performance off last year's impact of the Shanghai COVID shutdowns. Intelligent Devices and software and control were both up double digits. It is clear when we speak to customers and compete for projects, that our technology is winning in the marketplace. We are proud of what we have built and confident this will continue. Software and control growth of 19% is a testament to our leading control systems, DeltaV innovation, which are well-positioned where our customers are spending, areas like life sciences, metals and mining, hydrogen, clean fuels, and renewables. Within the quarter, we won large projects in life sciences, metals and mining, including lithium and LNG. Intelligent Devices grew 13%. Final control and measurement and analytical are the de facto standards for traditional energy, transition energy, chemical, and power markets across the globe. This later cycle exposure and the business's continued technology leadership in areas like control valves, actuators, regulators, pressure, temperature, flow, level, and wireless are differentiators for Emerson and are leading to strong financial returns. This strong sales performance and the continued operational execution of our teams led to 59% operating leverage in the quarter, excluding AspenTech. Favorable impacts from price cost and mix also drove accretive margin performance. Adjusted EPS was $1.29, beating our guidance, again, driven by the strong sales and operational performance. Free cash flow was up 83% year-over-year and is up 47% year to date. Please turn to slide five. We continue to accelerate progress on our strategic priorities. On May 31st, we closed the Copeland transaction. Emerson received $9.7 billion in upfront cash, or approximately $8 billion after tax, for the transaction. We also have the future proceeds from the $2.25 billion Copeland note receivable and our 40% common equity ownership with a transaction value of $1.7 billion. Post-closing, Emerson has a net cash position, and taking into consideration the NI acquisition, Emerson expects to have a net debt to EBITDA ratio of less than two. I also want to provide a quick update on our corporate and platform rightsizing activities we announced at the beginning of the year. As planned, we did not have any stranded costs due to the Copeland sale, and are well on track to achieve our $100 million annualized cost savings by 2024. We also released our ESG report in June, highlighting a 42% reduction in greenhouse gas emission intensity from our 2018 baseline. This achievement surpasses our 20% target six years ahead of schedule. In the report, we also highlight numerous examples of how Emerson is helping customers navigate the energy transition and the application of our technology to reducing emissions and energy usage. Lastly, before moving on to some exciting innovation and customer wins, I wanted to provide a quick update on the NI acquisition. We remain on track to close the acquisition in the first half of our fiscal 2024, and the teams are actively working on integration planning as we prepare to be ready for day one. In late June, NI shareholders voted in favor of our acquisition. HSR was once again approved. All necessary regulatory filings have been made. NI released their earnings last week with another record sales quarter, up 5% year-on-year and strong margin performance. They, too, are seeing supply chain constraints easing, which helped drive their sales performance by converting backlog despite the negative orders environment, which was down 17%. The demand environment for the business is playing out largely as we expected, with discrete and semiconductor weakness expected to improve as the calendar year goes on. Please turn to slide six. As the rate of our customer sustainability and digital investments continue to accelerate, Emerson is ensuring that we are positioned to capture this spend. Part of this is through our strong dedication to innovation and new-to-the-world products. Recently, Emerson has had numerous impactful innovations. First, aspenONE V14 is the next step in helping customers on the sustainability journey. Not only does V14 offer more than 100 sustainability-specific models, it also provides solutions to help customers manage emissions and design new hydrogen processes. V14 also further incorporates artificial intelligence, which, when combined with first principle models, helps users reach optimal production, increasing profitability while reducing emissions. Emerson also recently launched enhancements to our AMS Device Manager software platform, now allowing for more seamless integration with AspenTech solutions like Aspen Mtell. This allows users to have more access to critical, intelligent device data for use in advanced analytics and models. This example shows a differentiation of the Emerson plus AspenTech portfolio and technology synergy opportunities together. Emerson has long been a trusted partner of utilities around the globe, as evidenced by the fact that Ovation controls approximately 50% of the electricity generated in the United States. This leadership uniquely positions Emerson to support our customers' transition to renewables, and we are doing so through our new integrated renewable energy control solution, Ovation Green. Ovation Green allows customers to manage their renewables assets like solar, wind, hydro, and hydrogen, all in one platform, and we are already seeing early success with some of the largest utilities in the United States. Lastly, our measurement and analytical business recently launched a new-to-the-world, non-contacting radar device that is ideally suited for a range of applications in chemical, life sciences, and food and beverage. With advanced capabilities like Bluetooth and a built-in historian to store process data and insights, the transmitter is optimized for ease of use and simplicity. The device incorporates radar technology, a fast-growing technology in the measurement space. As we look at continued growth in our measurement business, this innovation will serve as a foundation to building level as the next technology pillar, accompanying our leadership in pressure, temperature, and flow. As one of our key drivers, growth drivers, Emerson is committed to accelerating innovation and meeting the rapidly evolving needs of our customers, like the ones highlighted here. Turning to slide seven. At our November investor conference, we outlined our through the cycle growth strategy, which includes our strategic focus on organic growth platforms. These markets, including life sciences, metals and mining, factory automation, industrial software, and energy transition, are areas closely aligned to the secular growth trends that are driving incremental customer investment. This is demonstrated in the evolution of our funnel over the past nine months. Not only have we successfully expanded our funnel to $9.7 billion over this time frame, up from $7.1 billion, but nearly all of this growth can be attributed to our growth markets, namely energy transition, life sciences, and metals and mining. Our energy transition funnel is now nearly $5 billion, up from $3.5 billion in November. This expanded funnel is driven by new project announcements in hydrogen, clean fuels, carbon capture, and EV batteries, all where we are actively engaged and our technology is well suited. We have also continued to expand our metals and mining and life science funnel, and we are now capturing additional strategic projects in our funnel as we dedicate more time and resources towards pursuing these engagements. In the third quarter alone, we added over 300 projects to the funnel and were awarded a content in over 50. This indicates a solid pace of project announcements as nearshoring and sustainability trends spread globally. We expect these organic growth platforms will grow double digits through the cycle, and we are off to an excellent start in 2023. Please turn to slide eight, where we'll highlight a few key wins across these segments, which underscore the power of Emerson's highly differentiated portfolio of solutions and the opportunity ahead for Emerson. The LNG wave continues to progress. Emerson is winning our share of opportunities. Of the projects that have moved forward over the past two years, Emerson has been awarded content in seven, demonstrating our continued leadership in this space. These are large projects with ample automation opportunity. On average, approximately $10 million of automation opportunity per million ton per annum of liquefaction. Our unmatched portfolio of measurement devices, valves, control systems, and now optimization software, differentiates Emerson as the only automation company capable of providing a holistic solution. Emerson's leading project execution is also a key differentiator for these large and complex projects. Through our Project Certainty approach, Emerson helps customers expedite project timelines and reduce project costs, key measures to reaching profitability faster. One of these seven projects was the Port Arthur LNG project. Emerson is excited to announce it will be supporting Bechtel Energy and Sempra Infrastructure in the automation of the Port Arthur LNG phase I project. This liquefaction and export terminal in Southeast Texas is a premier LNG project designed for safe, reliable, and efficient operations, delivering LNG to global markets through two trains, capable of producing up to 13.5 million metric tons per annum. Emerson was chosen as a key automation partner for Bechtel Energy, providing our leading DeltaV control system, final control valves, and measurement technology. On slide nine, the next market we'd like to highlight is the battery, the battery value chain. This is an area where we are winning projects based on the breadth, depth, and strength of Emerson's end-to-end capabilities, from the mining of lithium and copper, to refining and processing, and finally, to EV battery manufacturing, assembly, and recycling. In 2022, Emerson Technology helped produce over 65% of global electric vehicles. We are excited to continue supporting companies around the world as production expands across each of these high-growth segments. Recently, Emerson was selected to automate two very strategic projects in mining. First, the Ganfeng Lithium project in Argentina. Emerson's DeltaV control system was selected to automate the large-scale lithium mine, a strategic win in the lithium triangle between Argentina, Chile, and Bolivia, that holds much of the world's lithium reserves. DeltaV was selected because of its differentiated and flexible architecture, and commissioning savings with CHARMs. The next project success was for Codelco and the Andina copper mine in Chile. Codelco is the world's largest producer of copper, and Andina site will represent over 10% of Codelco's overall output. Emerson's DeltaV and control software were selected to help automate the treatment of water on the site, allowing Codelco to accurately control water quality, efficiency, and recycling. Emerson recently won a contract with one of the largest EV manufacturers because of our unique ability to support production across multiple processes in the value chain. With this project, Emerson will be the trusted automation partner to support two facilities: a lithium refining project and cathode production facility in Texas. DeltaV was chosen for both projects due to its robust software architecture and ability to bring together previous islands of automation. As the customer continues to grow operations globally with numerous expansions and new operations, Emerson is well positioned to be the supplier of choice, given the unique nature and value of the capabilities that we can deliver. Emerson was also recently awarded a large project to the leading German EV manufacturer to help automate the battery cell assembly process. As we look at future opportunities, NI has a leadership position with many of the largest EV and battery manufacturers in the world. NI's differentiated hardware and software solutions help customers with the R&D, testing, and validation of batteries and vehicles. We look forward to leveraging those relationships to expand our current factory automation business and build upon our recent successes. As you can tell, we are energized by these projects and our relevance with customers. We will share our progress as Emerson continues to partner with leading EV manufacturers around the world, and benefit from the strength and differentiation of our portfolio of assets. I'll now turn the call over to Mike Baughman. Thanks, Lal. Good morning, everyone. Please turn to slide 11. Our third quarter financial results were outstanding, and before talking about that, I want to thank our global teams for their hard work and execution. Our Emerson Management System is driving value as evidenced by our continued sales growth, margin expansion, earnings growth, and free cash flow performance. Turning to the results, underlying sales growth exceeded our expectations at 14%. GAAP sales were also up 14% for the quarter, and price contributed approximately five points of growth. Backlog of $6.9 billion remained flat quarter-over-quarter. Software and control performed better than we expected, growing underlying sales 19%, due to increased availability of electronic components and our ability to convert more of the backlog in this business. Intelligent Devices grew 13%, led by process and hybrid exposed businesses, mainly measurement and analytical and final control. These two businesses are leaders in later cycle markets and have a large installed base, which, along with the continued backlog conversion, contributed to strong growth in the quarter. From an industry perspective, process and hybrid remain healthy with double-digit growth in the quarter. As Lal mentioned, discrete activity has continued to slow, but still exhibited mid-single digit sales growth due to backlog conversion. Emerson adjusted segment EBITDA margin improved 370 basis points to 26.9%. Leverage, excluding AspenTech, was 59%. Strong sales growth, margin accretive price costs, and favorable product and project mix-... All reflect the excellent execution by our operations teams and contributed to the margin improvement. Adjusted EPS grew 40% to $1.29. I will discuss the details of that growth on the next chart. Lastly, free cash flow of $769 million was up 83% versus the prior year quarter. For the quarter, free cash flow conversion of adjusted earnings was 97%. The strong earnings growth and working capital improvement helped contribute to the free cash flow growth. Please turn to slide 11 for the details of adjusted EPS and bridge from the prior year. Most importantly, the strong 14% underlying sales growth and 59% segment level operating leverage contributed $0.29 of EPS growth year-over-year. Stock compensation was a $0.06 headwind due to lower stock comp expense in the prior year. That was more than offset by other corporate items and tax, which were an $0.08 tailwind. The reduced share count resulting from the $2 billion share repurchase completed in the 1st quarter contributed $0.04 to adjusted EPS. Lastly, now that the Copeland transaction is closed, we are including the interest from the Copeland note receivable in adjusted results and guidance moving forward. The Copeland note interest contributed $0.02 to adjusted EPS in the third quarter. It is important to note this was not included in our May guidance. Overall, adjusted EPS grew 40% year-over-year to $1.29. Turning to slide 12. As we look ahead to the rest of the year, I'd like to highlight a few key things. In general, end markets remain resilient. We have increased our expectations for process to double-digit sales growth, with meaningful contribution from secular growth segments, energy transition, and energy security. With continued strength in life sciences and metal, metals and mining, we now expect hybrid to grow low double digits in 2023. We are discussing nearshoring initiatives with more and more customers. This is not just a trend in the United States, and we see near and long-term benefits around the globe. For example, our team recently visited Australia and China, where we spoke to customers about their plans to make investments in new markets like life sciences. As a global leader for providing automation for this market, these customers are tapping Emerson to support their investments. Discrete demand is continuing to slow, especially in Europe, and we are beginning to see the impacts in the United States and Asia. Sales growth expectations, when combined with our safety and productivity commercial exposure, are in the low single-digit to mid-single-digit range as we have worked through backlog. The supply chain environment has continued to improve, allowing us to work through our backlog as we head into Q4. Price cost has been a significant tailwind in 2023, a reflection of our commercial excellence. We expect price for the year to approach 4 points, and we will remain diligent on price as a key performance lever. As we look to the future, we are excited by our growth opportunities. Emerson is uniquely positioned to support our customers' investments in key areas we expect to grow double digits through the cycle. We've demonstrated our leadership in energy transition markets like LNG, nuclear, hydrogen, clean fuels, carbon capture, and renewables. We are well-positioned to capture the long-term investments driven by nearshoring. Finally, we have a leading and differentiated software portfolio that is expected to have double-digit ACV growth through the cycle. These are all trends we expect to continue to augment Emerson's growth for the foreseeable future. Please turn to slide 13. As this chart shows, our performance this year has been exceptional. We have successfully executed on our portfolio transformation while continuing to drive strong results across the business and exceed on our commitments. Strong operational performance, improved price-cost management, and more favorable mix as we went through the year, gave us the ability to increase our expectations throughout the year. For 2023, underlying sales growth is now expected to be toward the top end of our previous 8.5%-10% guidance range. We expect both Intelligent Devices and software and control to be on par with this overall updated guidance. As a reminder, AspenTech will begin rolling into our underlying sales in Q4 as we lap a year of ownership. We are also increasing our expectation for segment operating leverage based on the strong Q3 result, sales strength, favorable price cost, and continued strong operational performance. We now expect segment operating leverage to be approximately 50%, excluding AspenTech. Adjusted EPS has been raised to $4.40-$4.45, a 22% year-over-year increase at the midpoint. Please note, this includes $0.06 of interest from the Copeland note receivable that we are now including in our adjusted results, $0.02 from Q3, and approximately $0.04 in Q4. AspenTech is still expected to contribute approximately $0.25 for the year. Post Copeland transaction close, please note, we have now included an estimate for the Copeland equity loss in our GAAP guidance numbers, which, in addition to the undeployed proceeds, is being removed from our adjusted results and guidance. We have also adjusted our expected tax rate to approximately 22% for the year. Free cash flow is expected to be $2.2 billion-$2.3 billion for the year, of which AspenTech is contributing approximately $300 million. Thanks for your attention. I will now turn back to Nick to open the call for questions. Thank you. Now begin the question and answer session. To ask a question, may press star then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. This time, we'll pause momentarily to assemble the roster. First question will be from Nigel Coe, Wolfe Research. Please go ahead. Oh, thanks. Good morning. Thanks for the questions. Good morning. Good morning. Good morning, Nigel. Morning. Just, just I thought maybe just to start off on, you know, the obviously very strong operating performance, but margins were the real, you know, standout. I'm just, just wondering, as we go into 2024, I mean, is anything, you know, we should think about in terms of, maybe some headwinds to margins? I'm thinking here about, you know, measurement analytics, very strong sequentially up to 20.7%. Are you confident you can grow off these margins going forward? Hey, Nigel. You know, yes, we're, we're very excited about the leverage that we've had with 40%, 53%, and then 59% in the quarter. You, you do see that operating leverage tip down a little bit in the fourth quarter, and we're gonna exit the year around 50%. Yeah, we, we feel good about the operating leverage, and we're not really in a position to talk about 2024 at this point, but we, we certainly are pleased with the current year performance. I'll just add a little bit of color. Thanks, Mike. I do believe that the underlying work that we've been doing around price, cost management, thinking about how we bring our differentiated technology to market, will be sustainable through this cycle, as we talked about. We look at the leverage targets as we go to 2024, and we'll talk about that later in the fall. I feel very good about the momentum in the business and the executional elements that are going to impact our ability to deliver differentiated margins on a go-forward basis. That's great. Thanks. My follow-up question is on the control systems organic growth in the high teens. That's a longer cycle business, and I don't really think about that as necessarily cycling up big or down big. I mean, how much of that is coming from, you know, sort of clear the backlog conversion with lead times, maybe some, you know, chip lead times coming down? How do we think about that going forward? Do you think you can maintain above average growth rates in control systems and software? Yeah. Hey, Nigel, Ram here. Yeah, I think, this particular quarter and this year, I think in the second half, the lead times catching up and better supply chains and shipping backlog is what is driving, the, the significant growth in our systems business. With that said, the project funnel is very good. The KOB3 is very good, so our expectations are the momentum in that business should continue into 2024. Great. Thanks, Ram. Thank you. Next question will be from Andy Kaplowitz of Citigroup. Please go ahead. Hey, good morning, everyone. Hi, Andy. You reiterated your mid-single-digit order growth forecast for this year, and y- you came in at 3% this quarter despite the discrete market slowdown. You, you obviously gave us the new funnel of opportunities, with mid-20% organic growth. Does that mean that Emerson's orders could reaccelerate from here, or how do you think about that, you know, given the markets that you laid out? Yeah, certainly, Andy, we feel confident in that, in that mid-single-digit guide that we laid out a quarter ago and believe we'll exit the year in that rate. The process and hybrid orders are in the high-single-digits as we exited the quarter, and that's where a significant amount of the momentum lies, not just in the capital expansion, but related to just everyday business activity. Of course, offset by the discrete markets that we've talked about through the quarter, but we're still very, very confident that we'll inch up from where we ended the quarter here, slightly. Well, then maybe I could ask you a more philosophical question on AspenTech. I know, you know, at this point it announced its guidance for FY 2024, low, low double-digit ACV growth, and it agreed not to buy Micromine and announced a big repurchase. Are there any lessons learned as you and Antonio have worked together now for a little over a year, and given AspenTech's FY 2024 guidance, do you see a nice uptick in AZPN's contribution to your EPS in 2024? No, look, we continue to, we continue to deliver on the synergy plan. I think that's step, that's point number one, not just in terms of pursuit of business, collaboration between the selling organizations, but most importantly, as I highlighted in the presentation, around technology. It's that technology tie-in that ultimately will differentiate our offerings in the, in the marketplace. Number two, look, over the quarter, we did a lot of work together. I, I think, I feel really good about the, the plan that AspenTech laid out, the way it was communicated yesterday. I thought it was very succinct and clear. I think they'll, execute very well as we go through the quarter. There's a lot of collaboration ongoing between our, our joint teams and, and momentum that continues to build a little over a year into this. Thanks a lot. I appreciate it. Thanks, Andy. Thank you. Next question will be from Josh Pokrzywinski of Morgan Stanley. Please go ahead. Hi, good morning, guys. Hi, Josh. Well, I'd love to kind of dig in a little bit on backlog here. Flat sequentially, you highlighted the, the funnel of activity growing pretty materially here. Presumably, the, the conversion rate starts to pick up a little bit here. Do you think we're sort of in this backlog zone for a while? I think a lot of your other peers out there in multis are, are starting to dip into backlog with lead time normalization. Just wondering where you guys sit on that or anything you'd want to call out for the next few quarters. Hey, Josh. Yeah, we, we certainly expect the backlog to come down a few hundred million dollars to the fourth quarter, and it's important to note that it's year-over-year, at the end of the year, we expect that to be up to a little over double-- double digits. Yes, the supply chain easing has certainly helped. As we look ahead, we see that backlog coming down a little bit in the fourth quarter. Got it. That's helpful. Just kind of going back to, to Nigel's question, maybe thinking about some of the, the factors, whether it's 2024 or maybe, you know, more broadly than that on, on mix. Seems like with a lot of these large projects, we're gonna see more KOB1, which I think maybe in the older days of Emerson was a bigger mix headwind. How do you guys think about that now, given the change in project composition, et cetera? Yeah, I, you know, I think, what-- first off, I think, just to add to what we said, you know, relayed to Nigel, the KOB3 business performance has been very strong. Right now, we're running at 65%+ KOB3 rates with strong performance in North America. That has really contributed to the outsized leverage we saw in the first three quarters, and we don't expect that to materially change in the next two to three quarters. You are right, as, as our project backlog has built up and, and we see project shipments go into 2024, that will throttle leverage down to the mid-30s or high 30s rates we've guided to you in the past. That's really a dynamic you should look for in 2024. Yeah, I, I think you're absolutely right. I think, there's a fixed handle on the, on the MRO in replacement business. We don't expect that. I think, you're absolutely right, to change as we go through the year. There's a lot of positive activity there. Mm-hmm. Feel good about that mix, despite a very robust capital project funnel. Got it. Appreciate it. Best of luck. Thank you. Next question will be from Steve Tusa, J.P. Morgan. Please go ahead. Hello? Hi, Steve. Hi. The incremental, getting back to Nigel's question, I guess, given what happened this year, is there any view on how you view kind of the long-term trajectory on those, on those incrementals? Can you just remind us of what your long-term view on that is and, and how that kind of plays out, and maybe how the mix may impact that over the next, you know, couple years, as perhaps the MRO stuff slows and the project stuff comes on? Yeah, look, we guided, in November, Steve, at 35 through the cycle. Obviously, we're in a, a very positive point in the cycle, as, at this moment in time. Look, as we look at our mix of business, our tech, geographical mix, as we go into November, we may assess that. That's the guide that we put out last November. Obviously, we're outperforming that number today. Then what, what is the contribution from kind of price cost this year, just roughly? Yeah. Well, on, on price, in the quarter, we have, nine points of volume and five points of price. Price will moderate as we go into the fourth. I think for the year, 3-3.5, approaching four points of price in the full year guide of 10% underlying sales. Yeah. Okay, great. Thanks a lot. Thank you. Thank you. Next question will be from Andrew Obin, Bank of America. Please go ahead. Hi, guys. Good morning. Good morning, Andrew. I guess the KOB terminology just refuses to die, huh? I'm trying, I'm trying to kill it. I am aware of that. Just a question on supply chain. Are you guys, you know, some of your competitors are talking about deflation or disinflation. Are you seeing an opportunity to extract discounts from your supply chain? Just trying to understand, right? People are talking about inflation subsiding. Are we gonna see bottom line benefit for a company like Emerson over the next six to 12 months? Simple answer is yes, Andrew. We looked at obviously direct material, indirect material, and logistics. We are gonna see deflation or positive NMI or favorable NMI. We are seeing that already in the second half of this year and should see that continue into next year, so it will be favorable for us. What I will say, though, is if you go back to pre-COVID levels, logistics costs, for example, are already there. We've seen a lot of the logistics benefit already come through. On the direct material front, particularly castings, machine parts, electronics, we will see deflation in 2024 versus 2023, but still not back to pre-COVID levels. Maybe the opportunity there for us is continued deflation over the next several quarters as the market eases. Excellent. Just a question on Aspen and Emerson. Can you just talk a little bit more about channel integration? Because, you know, we're hearing that you guys are driving Aspen and Emerson closer together, and the relationship is evolving. Just trying to understand how much upside do you think, or how much margin of safety there is, given that, you know, historically, Emerson sales force has been very, very commercial. You are incentivizing the salespeople. Seems like the relationship is going outside the initial channel. Just talk a little bit more about the opportunity. Thank you. Yeah, you are spot on. I think over the last year, and certainly in the last six months, the collaboration and the refinement of our go-to-market, our joint go-to-market approach, whether it's a project or the white spaces, has certainly improved. Yes, you are correct. In certain markets, China, for example, we're collaborating a lot more in terms of having the channels work together. Incentive plans for both channels to support each other have been put in place, and that's really stimulating the right behavior, if you will, as both teams go out and pursue competitive displacement opportunities, or Aspen, for example, selling on our DeltaV installed base. Yes, I think we'll continue to evolve and progress that. We're being very careful, and we're taking it market by market and doing what makes sense. I don't think there is a one-size-fits-all approach to every market, but certainly the collaboration and the incentives for sales organizations to collaborate have improved over the last six months. Thanks so much. Thank you. Next question will be from Chris Snyder, UBS. Please go ahead. Thank you, and congrats on a strong quarter. I guess wanted to follow up on some of the prior conversation and communication on margins. If our math's right, the guide seems to imply a pretty material sequential decline in margins into the fourth quarter, despite a step up in revenue. I guess, is that right? And what's driving that? Thank you. Yeah, we, we will see a decline in margin in the fourth quarter. If you think about the third quarter, that was driven by, by price and leverage, both of those things will be a little bit lower in the fourth quarter. As we mentioned, the, the pricing for the full year will be about four relative to the, to the five in the, in the fourth quarter or, or in the third quarter, rather. The, the mix will also have an effect there as we close out the year. Thank you. I appreciate that. And then, you know, just maybe, was looking for some more color on the pipeline of big process projects. You know, there's some concern in the market that, you know, with oil and gas kind of commodities, down, you know, pretty well off the high, and that includes LNG, that there could be some slowdown or pressure on these projects. You seem to have really good momentum on there. So can you maybe talk about, you know, what you're seeing there, and, and particularly on the traditional energy and the LNG side? Thank you. Yeah, I'll, I'll make a couple comments, and if Ram wants to add color here. Look, the bulk of what we're seeing is gas. It's not, it's not oil. Where we do see activity in the oil, it's around sustainability, conversions, carbon capture, et cetera, and emissions reduction. It's the gas activity that I think is very relevant, and that is entirely tied to Europe, to energy security and affordability. We have not seen any slowdown in the activity, as a matter of fact, an acceleration through the quarter in terms of funding processes. There are seven projects currently out of nine funded and moving forward aggressively, and we've booked seven of the nine, in seven of the nine already. I haven't seen any evidence, and we have not felt within the business any evidence of any potential pullback in the gas infrastructure build-out or LNG infrastructure build-out. Ram? Just to add to that, you know, as it relates to our traditional markets, outside of LNG, as Lal mentioned, chemical is another area where we see continued momentum on projects, certainly in markets like the Middle East, U.S., and China. In terms of our true traditional energy business, FPSO activity in Brazil, Guyana and Asia still continues to be good and moving forward. Obviously, as we've said, you know, activities in metals and mining, life sciences and, and nuclear continue to progress. The funnel is diversified. That's what we like about the funnel, and it's not really dependent outside of LNG, not really dependent on one large market. We feel very confident that on the LNG side, particularly in Qatar and in the U.S. and East Africa, those projects will move forward. Thank you for all that color. Appreciate it. Thank you. Next question will be from Deane Dray, RBC Capital Markets. Please go ahead. Thank you. Good morning, everyone. Good morning, Dean. Hey, I appreciate the spotlight you put on the battery value chain, and we see this as linked to the whole array of these powerful mega projects that are going on now. In fact, battery is one of, one of the biggest there. Just can you give us-- and it's all tied to the reshoring, nearshoring phenomenon. Give us a sense of what kind of win rates you're seeing there within the battery, but also on other projects. You know, there's more than 50 different projects over $1 billion. Just if you could cut across those, where else are you winning, like in the semiconductor side, other automation projects and so forth? Yeah, I know, Deane. I'll be happy to. I'll start with LNG, which has been very important. We're winning at a rate higher than 50% so far. I feel really good about continued differentiation in the marketplace and really becoming a de facto automation supplier there. In the hydrogen space, at 50% right now in terms of win rate to the funnel. Across the battery ecosystem, feel very, very strong that very, very confident that that sits in the 45%-55% range as well. In fields like life sciences, it's much higher, and that is due to the very strong position of DeltaV and the various instrumentation technologies that we bring to bear. Overall, feel really good about the execution to the projects in the funnel. The pursuits are funded by internal teams. There's multi-varied calling points between engineering companies, end users, and, and, and, and, and EPS, and, and contractors. It, it, it occurs at all levels within our organization, from, from Ram and I, down into the card-carrying salespeople. Good to hear. Then, second question would be for Mike. Just can you share with us some of the actions on the working capital side? There was really good free cash flow in the quarter. I would imagine you're still in this sort of interim period, you know, prior to NI, where there's only so much you can do on the working capital side. Just give us a sense of what actions near term, how that translates into free cash flow for the year and then into early 2024. Yeah, Deane. you know, we have been really focused on inventory with the supply chain challenges, and we've seen some improvement, and we expect to see some continued improvement as we move into the fourth quarter around inventory. On receivables, you know, with 14% growth, there's going to be a growth in receivables. I'll tell you that DSO have stayed flat, and the execution there has been really, really good. If we look ahead, we're expecting for the fourth quarter, operating cash flow around $800 million-$900 million, and CapEx around $150, which should put us in around $2.2 billion-$2.3 billion for the year. I feel good about the actions that we're taking. There's been a strong focus on inventory with the backdrop of the, the supply chain moving around and, and settling, which is good, but, that, that's been our focus. That's great. The past due performance has continued to come down on the receivables side, which has been really helpful as well. Yeah, but just let's be clear, a growth in accounts receivable is a high, high quality problem. It's true. Thank you. Thank you. Next question will be from Jeff Sprague, Vertical Research. Please go ahead. Good morning, everyone. I apologize if this was addressed. I was on a little late, but, well, can you just give us, you know, a thought, your updated thoughts on, you know, how we're progressing towards regulatory approvals on National Instruments? I know your view on 2024 was more subdued than where the Street consensus was, but, you know, they did post, you know, some soft orders here in Q2. Just any thoughts on maybe the trajectory of that business as you work towards close? Yeah, Jeff. Yes, I did cover it in my script, but I'd be happy to repeat the key points. On the regulatory, we, we have HSR approval, and all the filings have been made, some already, obviously, obtained. We, we feel very confident on the timeline to close in the first half of our fiscal 2024. In terms of the, the business performance, look, it's, it's largely playing out as we built into our model. Orders are down 17% end of the queue. That's largely driven by weakness in semiconductor and discrete, but we expect that to improve as the calendar year goes on, and that's how we've built into the business, into the business case. Having said that, Jeff, they had another record quarter. Their sales were up 5% year-over-year. The profitability continued to improve and is very strong, particularly GP at very high levels. We feel excellent about the execution in the business, and we'll continue to stay close on our collaboration to be in our integration planning so that we can hit the ground running on day one. Great. Then, a few things I did hear on the Q&A was a lot of discussion here on, you know, margin leverage, mix, and et cetera. Just kind of drilling in on price costs specifically. I would imagine we're maybe at or near kind of peak positive gap on, you know, on that metric. I just wonder if you'd opine on that. Maybe more importantly, though, my question is. You know, your ability to kind of maintain a positive spread between price and cost as we kind of look forward here the next several quarters? Yeah. Yeah, Ram, why don't you give it a try? Yeah, I think we're very confident in maintaining price-cost green going into next year. However, price-cost in terms of margin point contribution or the spread will be lower as we go forward. I mean, we've had an exceptionally good year here in terms of price performance and obviously NMI coming down in the second half. That'll continue. I mean, we will be green price cost, the margin point contribution from it will be lower in 2024, which will have an impact on leverage rates. Great. Understand. Thank you. Thank you. Next question will be from Tommy Moll, Stephens Inc. Please go ahead. Good morning. Thanks for taking my questions. Hi, Tommy. Well, I think it was a quarter ago, maybe before, you called out some of the softening on the discrete side. That was originally, I think, in Europe, primarily Germany, but then you highlighted some evolving trends in the U.S. and Asia as well. Can you give us any more insight there? Yeah, we saw that develop through the quarter, Tommy. You're absolutely right. A quarter ago, we talked about weakness that we began to see, particularly in automotive and in packaging OEMs, which, as you know, in Germany, not only serve the German market, but export throughout the world. That did spread into the United States and into parts of Asia, and that developed through the quarter. That drove more weakness in that discrete business, which again, makes sense from a cycle perspective for us, but that really developed over the last three months. Thank you. I appreciate it. Well, I, I also wanted to ask about culture. It's something that you've highlighted throughout your entire tenure as CEO. At the same time, pro forma for NI, you'll have a, a much larger organization, including pieces that had their own cultures, before they were folded into Emerson. Situate us on that journey and give us some insight into what the consolidated approach will be, once your portfolio is more mature. Yeah, no, I appreciate the question, Tommy. As you know, that's pillar number one and continues to be pillar number one for our organization. We're very excited about the, the, the journey we're on. As you know, culture is not something that you change immediately, but is you have to journey. There's been a lot done in, in, in, across Emerson. What I particularly am excited about is the the, the culture that exists today at National Instruments. It is something that is familiar to us. It is an a very attractive place to work, a culture based around learning, curiosity, and that is felt in every engagement that we've had with that team. They have moved ahead in many of the dimensions that we are looking to do here at Emerson, we're going to be learning from NI and applying a lot of their lessons to what we implement here in our company. I think there's an accretion there and an accelerator there from what they've done. At the end of the day, it's a company of engineers who are curious, who lean forward and think about tech in differentiated ways, and that's essentially who we are today. Thank you. Well, I'll turn it back. Thank you. Next question will be from Joe O'Dea of Wells Fargo. Please go ahead. Hi, thanks for taking my questions. I guess one, one more just related to the, the price cost dynamic. I think pretty clear in terms of, you know, what you're seeing on the cost opportunity side. Just, you know, overall, how you think that filters through on, on the price side. I appreciate that, you know, still a positive margin spread, even if narrowing. In conversations you're having, you know, are, are you seeing a little bit more discussion around that? Are you seeing areas where price is actually moving down? No, we expect price to remain positive. The magnitude of the price will be obviously, it's not as it won't the increases won't be as positive as we saw in the inflationary times of the last couple of years. But our automation business, we, we have a leadership position in all the markets we play in. We bring a lot of technology to our customers. Obviously, KOB3, which is the replacement cycle, is 65% of our sales. We'll be positive price going into 2024, even as we execute on the favorable deflation that we will see on purchases like electronics, castings, machine parts. Got it. Then also, wanted to circle back a couple comments on nearshoring, and I think kind of a broadening out maybe of the trends there. So if you could expand on that a little bit and just touch on sort of the evolution of what you've seen, maybe kind of led in North America, but just sort of what inning you think we're on. Are you seeing any kind of stabilization in those trends in the U.S., but you're seeing kind of growth budding in other regions? So if you can touch on those regions and verticals a little bit more. I, I'll say a few comments and have, ask Ram to add a little color as well. Look, I think we're in early innings, certainly early innings in terms of the infrastructure, chips, nearshoring activities, and it's broad-based. It's, it's driven clearly in the, in the, in the, EV battery value chain that I described in life sciences, semiconductor, which will benefit, and National Instruments significantly as well. It's Australia, it's Europe, it's the United States, with very robust activity across all world areas. I have to say, based on just the pace of activity, I, I do believe there are many innings yet to be played here. Yes. Got it. Thank you. Thank you. Thank you. This concludes our conference today. Thank you for attending this presentation. You may now disconnect.